Former Amp'd CEO Weighs In
By Monica Alleven
No doubt about it, Amp'd Mobile went out of business owing a lot of people a lot of money -- more than $33 million to Verizon Wireless, more than $16 million to Motorola, and the list goes on.
Peter Adderton
But one segment greatly affected by the Amp'd going-out-of-business sale is the customer base, and former CEO Peter Adderton says he thinks they are often the forgotten segment.
Much attention has been given to what's been chalked up to mismanagement and over-spending at Amp'd, but other things were at play, says Adderton, who parted with the company about a month before it filed for bankruptcy protection over strategic differences he had with the board. The company filed for bankruptcy protection on June 1.
To hear Adderton tell it, the company had a pretty good fix on how to deal with its billing issues well before April. And it might have had time to fix the situation if it had more funding. But he speculates that funding sources might have started getting skittish just when Amp'd needed more funding. Recently, the downturn in the shares of some flat-rate carriers have been associated with concerns about the subprime market.
As for those thousands of non-paying customers - approaching 80,000 at one point according to court filings - those didn't transpire overnight. It took months for those figures to add up. If the company had more time, it might have worked through those issues and come out on top, Adderton suggests. After all, Amp'd was not the first company to have collection problems. Other companies just starting out, including the likes of Sprint PCS, have experienced collection issues, he says.
"There was no doubt that we had a problem with operations and billing and collections," he says. "We got caught in a perfect storm."
Hindsight being what it is, Adderton predictably has some things he would have done differently. One thing he probably would do differently is tap a smaller group of investors for larger amounts of funding, thereby reducing the number of "bosses," so to speak, into a more manageable amount. "You do need to have the support and the deep pockets to make sure you can ride through" the harder times.
Venture capitalists and private equity firms invested $350 million in the company because, he says, they believed in the mobile media business concept. Amp'd delivered on that promise, according to Adderton. Fundamentally, the brand was strong, he says.
According to court filings, the company's users consumed more than 4 million videos, songs and mobile games in the first quarter of 2007, doubling the fourth quarter 2006 figure of 2 million. Subscribers were downloading more over-the-air music than ringtones.
Back to those customers. What about reports of rebates that customers never received? Amp'd was trying to give customers credit on their bills when they did not receive rebates, but it is unclear how many customers got credit before the company went under. As for billing issues, in some cases, customers were not receiving their bills because the company had the wrong address, according to a spokeswoman. Amp'd also tried to come up with creative ways to get non-paying customers, unfamiliar with credit, to pay their bills.
In July, Prexar Mobile offered to continue serving Amp'd customers who ported their numbers by Aug. 15. After that date, Amp'd customers could no longer take their number with them, although they could still sign up with Prexar with a new mobile number.
How does Adderton feel about all those former customers who harbor bad feelings about Amp'd? "I feel horrible," he says, as well as for the 200 or so people who lost their jobs. They had "put their heart and soul into this," he says. "There's a personal side to this."
"If we had our time again, it would be making sure we got everything right," including enough runway. He wouldn't go so far as to say it would have been better with prepaid, which has its own challenges.
Verizon Wireless, which provided the underlying network for the MVNO and threatened to cut off service, has gotten a bad rap, he says, and "I don't think they deserved it."
Adderton doesn't blame bcgi, either, from a billing standpoint and says he feels bad for what happened. "It wasn't any one person's fault," he says. "When we first went out there, we made some mistakes" and learned a lot, he says. "The idea was sound."
He doesn't view the MVNO model as a bad one. "I'm a big believer in the MVNO business," he says.
Neither he nor Seth Cummings, former senior vice president of content, would comment specifically on their future plans, including reports linked to WiMAX company Clearwire. But one telling sign is their phones are ringing, he says. "Stay tuned."
Others already have landed at other jobs. Former COO Sue Swenson is now COO of New Motion, a digital entertainment company based in Irvine, Calif. She's also a former president and COO of Leap Wireless and a former CEO for Cellular One. She got her start in the wireless industry at Pactel Cellular back in 1979.
Building Amp'd was a different situation than Boost Mobile, which Adderton founded in Australia before bringing that model the U.S. market and ultimately selling it to Nextel Communications. Amp'd called for data, content, music, video and games, far more than Boost. Adderton is still the largest shareholder of Boost in Australia.
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